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CVR reports net gain on first quarter RINs

27 Apr 2017 19:49 (+01:00 GMT)
CVR reports net gain on first quarter RINs

Houston, 27 April (Argus) — CVR Energy's refining subsidiary reported an unusual $6.4mn first quarter gain from a biofuels policy it continues to assail.

The US independent refiner operating in the midcontinent estimated overall costs for the year associated with federal biofuel mandates would cost about $170mn. But first quarter costs, based on lower prices for renewable identification numbers (RINs) used to comply with the mandate and the company's "valuation of our obligation" were "negative $6.4mn," said chief financial officer Susan Ball, down from $43.1mn in the same quarter a year ago.

The company did not respond to calls for comment to clarify the number, and did not break out RINs expenses in quarterly financial data published today. Chief executive Jack Lipinski refused to further explain the RINs cost on a quarterly earnings call.

"We do not disclose in any great detail, nor will we, the exact strategy we use to buy RINs, what we may have or many not have as any reserves, or obligations," Lipinski said.

The company's strategy operated "within the law and within all the provisions" of the biofuel mandates, he said.

The Renewable Fuel Standard (RFS) requires refiners, importers and certain other companies adding to the US transportation fuel supply to ensure that rising volumes of biofuels enter that pool each year.

Obligated companies can prove meeting those requirements by blending sufficient fuel or purchasing RINs representing blended fuel from other blenders.

Merchant refiners such as CVR Energy and Valero, which generally produce far more fuel than they can directly blend, have incurred hundreds of millions of dollars in costs and railed against the program. Carl Icahn, the majority owner of CVR Energy and President Donald Trump's special advisor on regulatory reform, has singled out the program as all that is wrong with federal regulation.